AN ACT TO ADD A NEW CHAPTER 16 TO 18 GCA; TO ADD A NEW ITEM (q) TO 4 GCA §8104; TO ADD A NEW SECTION (r) TO 4 GCA; TO REPEAL AND REENACT §8113 OF 4 GCA; TO AMEND §8130 OF 4 GCA; TO ENABLE GOVERNMENT EMPLOYEES TO BECOME FULL PARTICIPANTS IN THE FREE ENTERPRISE SYSTEM, TO PROVIDE FOR EMPLOYEE-OWNED COMPANIES (EOC) AND TO ENACT THE EMPLOYEE-OWNED COMPANY LAW AND FOR OTHER PURPOSES.

_BE IT ENACTED BY THE PEOPLE OF GUAM:

Legislative Intent

Hard economic times have dictated that certain government functions be outsourced. While the outsourcing will work hardship on many workers, workers ought to be empowered to seize the opportunities presented by outsourcing to improve their economic lot.

When government functions are outsourced, government employees ought to have the opportnity to share in the profits created by their labor, to become their own bosses and otherwise share in the benefits of free enterprise. When government functions are outsourced, government of Guam employees should be encouraged to form companies and bid on the outsourcing contracts.

To that end, the legislature has created a new business designation (EOC) for companies organized by employees whose jobs will be subject to outsourcing. The legislature declares that it is the policy of the law that government employees be encouraged to form these companies and bid on outsourcing contracts. In order to facilitate EOC’s bidding on outsourcing contracts, the legislature has made certain parts of the Procurement Law inapplicable to EOC’s.

The retirement law is an important fringe benefit that must be revised to comport with the new realities of government employment but not at the expense of the actuarial soundness of the fund. It is the intent that EOC employees may under certain circumstances remain members of the Government of Guam Retirement Fund. As an alternative, former employees should have immediate access to their contributions to the fund.

Table of Contents

Section 1. Adds new Chapter 16 to 18 GCA, Employee-Owned Company.
Section 2. Adds new item (q) to 4 GCA §8104, definition of displaced employee.
Section 3. Adds new section (r) to 4 GCA §8104, definition of subsequent nongovernmental service.
Section 4. Repeals and reenacts 4 GCA §8113, Subsequent Nongovernmental Service.
Section 5. Amends §8130 of 4 GCA, refund on separation.

______ Section 1 Employee-Owned Company. A new chapter 16 is added to 18 GCA to read:
_____ _____ _____ _____ Chapter 16 Employee-owned Companies

_____ Section 16000. Citation. This Chapter may be cited as the Employee-Owned Company Law.
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_____ Section 16001. Policy of the law. It is the policy of the law that government employees have the opportunity to put their hard work, dedication and enterprise to work so that they may take full advantage of their hard work. When government functions are outsourced, government employees ought to have the opportunity to share in the profits created by their labor, to become their own bosses and otherwise share in the benefits of free enterprise. When government functions are outsourced, government of Guam employees should be encouraged to form companies and bid on the outsourcing contracts.

______ Section 16002. Employee-owned companies. In this Chapter employee-owned company (EOC) means any form of business organization described in this title that is formed and organized by government of Guam employees whose jobs may be privatized or outsourced.

______ Section 16003. Same: name. The name of an employee-owned company shall contain the letters EOC.

______ Section 16003. Same: ownership. Regardless of the business form of an EOC the majority of the ownership and control of EOC must, at the time of its formation and for five years thereafter, be held by displaced employees.

______ Section 16004. Same: conflict of interest. The provisions of 5 GCA §§5626, 5628, 5632 and 5633 shall not apply to an EOC or its owners when the EOC is attempting to acquire or participate in a contract with the government to provide services that have been or will be privatized or outsourced.

______ Section 16005. Small Business Development Center. The Small Business Development Center of the University of Guam shall develop a program to assist employees in the formation EOC’s.

______ Section 2 Definition of displaced employee. A new item (q) is added to 4 GCA §8104 to read:
_____(q) Displaced employee shall mean an employee who had been employed by an entity of the government that was outsourced or privatized and the employment was terminated as a result of the outsourcing or privatization.

______ Section 3 Definition of subsequent nongovernmental service. A new section (r) is added to 4 GCA §8104 to read:
_____(r) Subsequent Nongovernmental Service shall mean paid employment with the employer that, by-means-of outsourcing or privatizing, assumed the function or functions that a displaced employee was employed by the government of Guam to accomplish.

______ Section 4 Subsequent nongovernmental service. 4 GCA §8113 is repealed and reenacted to read:
_____ § 8113. Same: Subsequent Nongovernmental Service.
_____ Any employee who shall have been employed by the government of Guam for a period of ten (10) years or more and who is a member of the Fund, who becomes a displaced employee as that term is defined in 4 GCA §8104(q) who has not terminated his membership in the Fund may be allowed credit for up to five years. Subsequent Nongovernmental Service provided that he pays to the Fund during the time he is earning that credit the member’s and employer’s contributions in biweekly payments in the amounts that would have been paid had this employment been with the government of Guam. Contributions shall be made at such times and in such manner as the Board by rule directs. An employee must elect, in such manner as required by the Board, Subsequent Nongovernmental Service prior to his last day of employment with the government of Guam.

______ Section 5 Refund on separation. §8130 of 4GCA (a) is amended to read:
_____ § 8130. Refund on Separation.
_____ (a) Upon complete separation from service before a member shall have completed at least twenty (20) years of total service, the member shall be entitled to receive a refund of his total contributions, including regular interest, but no payment of interest shall be
made in any case in which total service is less than one (1) year. Total contributions shall include all contributions made by a member to obtain various types of credit authorized by this Chapter.
Any member who withdraws after having completed at least five (5) years total service shall have the option of leaving his contributions in the Fund and receiving a service retirement annuity upon attainment of the age of sixty (60) years without choice of any of the optional survivors" benefits herein under described.
If such member has less than twenty (20) years of total service, he may elect to receive his contributions, with regular interest, as herein above provided, in lieu of the service retirement annuity. If his total service is twenty (20) years or more, the acceptance of such deferred retirement annuity payment beginning at the age of sixty (60) years, shall be mandatory as to such member., provided, however, that a displaced employee may elect to receive his contributions, with regular interest, as herein above provided notwithstanding that his total service is twenty (20) years or more.
Any member receiving a refund of contributions shall thereby forfeit, waive and relinquish all accrued rights and benefits in the system, including all credited and creditable service. The Board may, in its discretion regardless of cause, withhold payment of a refund for a period not to exceed one (1) year after receipt of an application from a member. provided, however, that the Board shall pay a refund to a displaced employee upon receipt of his application.